Chapter 3 Flashcards
Total assets=
Total liabilites + Total stockholders equity
a financial statement that shows a firm’s financial position (assets, liabilities, and equity) at a point in time
Balance sheet
Total stockholder equity=
Total assets- total liabilities
Net working capital=
total current assets- total current liabilities
net plant and equipment=
total plant and equipment- accumulated depreciation
represents stock that the firm has repurchased from investors.
Treasury stock
The generally accepted accounting principles (GAAP) are set by the
The Financial Accounting Standards Board (FASB).
The depreciation method used by a firm does not affect the cost of the asset. True/False
True
Accounting statements are
based on historical data
Earnings per share are measured by dividing earnings-before-interest-and-taxes (EBIT) by the number of shares outstanding. True/False
False
Buying and selling long-term assets are considered _____ activities in the statement of cash flows of a firm.
Investing
Accounting profits do not consider noncash expenses. True/False
False
Interest is a tax-deductible expense. This causes firms to have a preference for
financing with bonds.